QuestionsQuestions (DENR ADMINISTRATIVE ORDER NO. 63)
An FTAA is an agreement or contract between the Government and a Filipino or foreign-owned corporation for the financial or technical assistance for large-scale exploration, development, and utilization of mineral resources.
It refers to exploration, development, and utilization of mineral resources involving a committed capital investment of at least US$50 million in a single mining unit project.
Any corporation, partnership, association, or cooperative duly registered in the Philippines where more than 40% of the capital is owned by non-Filipino citizens.
Contract Area is the area originally awarded under the FTAA. Project Area is the area remaining after relinquishment and must not be more than 5% of the contract area.
After five (5) years of exploration, relinquish up to 95% of the contract area, with minimum relinquishment per year of 10% of the contract area.
Onshore: 1,235 meridional blocks (100,000 hectares). Offshore: 16,000 meridional blocks (1,296,000 hectares) reckoned seaward from 100 meters from shore waterlines at mean low tide.
Maximum of 25 years, renewable for another period not exceeding 25 years. Exploration & feasibility study must be completed within 5 years from approval; construction & development and production/utilization cover the remaining years.
Filed with and accepted by the Central Office Technical Secretariat (MGB) after payment of fees; Regional Office must verify availability and submit recommendations within 30 days. Priority goes to the applicant who first filed if multiple applicants apply for the same area. Comments/recommendations from Undersecretaries are due within 10 days.
Priority is given to the applicant who first filed the application.
The applicant must post a financial guaranty bond equivalent to the expenditure obligations for any year during the exploration period, and must make a firm commitment of at least US$50 million (or equivalent) invested in the contract area; prior to construction/development, it must submit documentary evidence from an internationally recognized offshore financial institution of sufficient accessible funds for capital investment in a single mining unit of US$50 million less all exploration costs.
Proof of technical competence showing track record in mineral resource exploration, development, and utilization; technology to be introduced; and names and curriculum vitae of the technical men to undertake the operation.
A Letter of Intent; documents on juridical personality (Articles of Incorporation, By-Laws, SEC registration papers); all information/data and documents connected to Sections 3.a and 3.b; certified copies of prior mining contracts/permits/assignments; and the financial statement of the mother company.
A financial guarantee bond as defined in Section 3.a.
A technical description of the proposed project area and its status as known to the applicant; mining operations and the technology to be used/developed; and contributions to the economic and general welfare of the country that will be feasibly generated.
The panel includes (1) DENR Secretary (Chairman), (2) Socio-Economic Planning/NEDA Director-General (Vice Chairman), (3) Finance Secretary representative, (4) Trade and Industry Secretary representative, (5) Central Bank Governor representative, (6) Board of Investments Chairman representative, and (7) MGB Director (member).
Falsehood or omission of facts in the proposal; default or substantial breach of agreement terms; by mutual consent; or written notice by the contractor if the project is no longer economically feasible after reasonable diligence.
Net revenue is shared 60-40: 60% Government take and 40% Contractor. Collection of the Government’s share commences after the Contractor fully recovers its pre-operating expenses.
After ten (10) years from recovery of pre-operating expenses, the contractor has one (1) year (extendable by another one (1) year by the Secretary) to divest equity to at least 60% Filipino equity. Failure results in automatic cancellation of the FTAA and disposition of the area under the relinquishment rules.
The contractor may convert at any stage of exploration if ores are economically inadequate for large-scale mining; it must notify the Government within 30 days and submit revisions within 60 days. It has one (1) year (extendable by another one (1) year) to satisfy the 60% Filipino equity requirement. Failure to convert within the period causes automatic forfeiture of the conversion right and disposition of the area under Section 12.